Ties to the American Legislative Exchange Council

PhRMA was a 2011 recipient of ALEC's Private Sector Member of the Year Award and a "Chairman" level sponsor of 2011 ALEC Annual Conference, which equated to $50,000 in 2010. It was also a sponsor of Louisiana Governor Bobby Jindal's plenary luncheon speech at the 2011 ALEC Annual Conference.[11]

ALEC is a corporate bill mill. It is not just a lobby or a front group; it is much more powerful than that. Through ALEC, corporations hand state legislators their wishlists to benefit their bottom line. Corporations fund almost all of ALEC's operations. They pay for a seat on ALEC task forces where corporate lobbyists and special interest reps vote with elected officials to approve “model” bills. Learn more at the Center for Media and Democracy's ALECexposed.org, and check out breaking news on our PRWatch.org site.

In 2010, PhRMA contributed $356,075 to ALEC's "Scholarship Fund." The Fund compensates state legislators that are ALEC members for the traveling expenses they incur to attend ALEC conferences, including the costs of flights and hotels. PhRMA's 2010 IRS filings list the location of the recipient of the funds at the address of the offices of Hamilton Consulting in Madison, WI rather than ALEC's office in Washington, DC. The tax filing raised questions about which legislators were benefitting from PhRMA's contributions and why PhRMA made the decision to funnel its funds through Wisconsin.[16]

Soon after Wisconsin Governor Scott Walker came into office, Walker and GOP state legislators pushed for the adoption of Wisconsin Act 2, an ALEC-influenced bill that benefitted the bottom line of PhRMA members. The bill seeks to implement "tort reform" by "limiting the ability to hold corporations accountable for causing injury or death" and "make it easier for corporations like drugmakers to escape liability for manufacturing dangerous products or products with insufficient warnings about hazards." The legislation drew heavily from ALEC Model bills on tort reform, including the "Constitutional Guidelines for Punitive Damages Act" and the "Product Liability Act." On January 27, 2011, the bill was signed into law. Republicans also sought to pass LRB 2890, a bill introduced in October 2011 that is based on ALEC's "Drug Liability Act." The bill "gives drug and medical device manufacturers complete immunity from lawsuits based on strict liability if the product was approved by the Food and Drug Administration." [17]

Political Contributions and Lobbying

In 2010, PhRMA spent $21,740,000 on lobbying costs.[18] It has 20 lobbyists on staff in 2011 [19] and had 29 in 2010.[20] PhRMA has lobbied for 22 bills in 2011[21] and lobbied for 51 bills in 2010.[22]

Open Secrets reports that in 2010, PhRMA gave a total of $58,800 to House candidates ($40,800 to Democrats) and $65,000 to Senate candidates ($50,500 to Democrats).[23]

See below for more, including the list of lobbyists active for PhRMA in 2011.

Funding groups and PACs

The February 2003 issue of the AARP Bulletin reported: "Three nonprofit organizations that claim to speak for older Americans are in fact heavily bankrolled by the pharmaceutical industry, an examination of tax records by the AARP Bulletin shows. United Seniors Association, for example, got more than a third of its funds in 2001 from drug-industry sources. The big donors included Pharmaceutical Research and Manufacturers of America (PhRMA), the industry's trade association; Citizens for Better Medicare, a PhRMA-funded nonprofit group; and Pfizer Inc. Total industry contributions: at least $3.1 million."

"PhRMA Appears to Have Funneled Up to $41 Million To "Stealth PACs" to Help Elect a Drug Industry-Friendly Congress," according to a Sept. 2004 report published by stealthpacs.org.

PhRMA PR campaigns

2006: Qorvis and new medicines

In September 2006, the PR industry trade press reported that PhRMA had retained Qorvis Communications, "for a national PR campaign to educate the public about the good work done by drug companies and the important role they play in developing new medicines." [1]

"The PhRMA strategy emphasizes public and media education about the organization’s core mission and values and its advocacy for public policies that encourage the discovery of important new medicines," according to the Holmes Report. "Qorvis will employ a campaign-style approach that is intended to complement PhRMA’s new communications department, which has replaced a once-rigid structure of silos around individual issues with a flat, team-based model the group says has encouraged increased flexibility and creativity." [2]

"Since being named CEO at PhRMA more than a year ago, former Louisiana Representative Billy Tauzin and his communications team, led by Ken Johnson, have been implementing an aggressive public relations campaign in an attempt to address the industry's numerous reputation challenges, from pricing to safety to whether drugs are marketed over-aggressively," wrote the Holmes Report. [3]

2005: Aggressive PR

In May 2005, it was reported that PhRMA was launching "an aggressive new PR plan," highlighting its new CEO, former Congressman and cancer survivor Billy Tauzin. According to PhRMA senior vice-president of communications Ken Johnson (who should not be confused with the Ken Johnson who is the Southern Regional Director of the AFL-CIO), the new plan includes reorganizing media relations "almost like a beat system," with point people for "state, federal, or international outreach."

PhRMA also launched a radio series called Healthcare Now, "which Johnson likens to an ANR (audio news release) that can be played in small markets without health reporters." PhRMA is also "building an onsite studio" to allow Tauzin to do more television interviews and speaking events. Johnson said part of PhRMA's PR strategy is to make Tauzin "an evangelist for the pharmaceutical industry." [4]

2005: Pricing issues and marketing

In late March 2005, the Los Angeles Times reported that the pharmaceutical industry was facing "pressure from many states to provide cheaper prescription drugs." Washington state and Rhode Island legislators were considering how to control medical costs, and "Ohio and Maine recently have launched their own discount plans for low-income people." Yet PhRMA, along with individual drug companies, "launched its most aggressive counterattack in California," to defeat a proposed ballot initiative "even before the authors have gathered enough signatures to qualify it for the next election." PhRMA vice-president Jan Faiks said, "We take [the proposed initiative] as such a serious threat to the health and welfare of the pharmaceutical industry that we have to make a stand here," in California. "It's a very bad precedent. You're the leader in the country, and there are 26 states that allow ballot initiatives." [5]

Part of industry's concern at the proposed California initiative, authored by the Oakland nonprofit organization Health Access California, was due to its "punishing individual manufacturers that decline to lower prices voluntarily" - a level of enforcement the industry had been able to avoid in other states. Under the proposed California initiative, "drug companies that do not consent to the discounts could be shut out of a prized market: the state's huge Medi-Cal program, which annually buys $3 billion worth of drugs for the poor." [6]

Perhaps most disturbingly, PhRMA threatened "retaliatory initiatives aimed at trial lawyers and unions, which are most likely to be donors to Health Access' ballot measure." The industry's "two companion ballot measures" were unmistakably "aimed at the heart of Democrats' donor base." One measure "would slash trial lawyers' contingency fees," while the other "would require public employee unions to obtain members' permission before spending their dues on political activities." PhRMA's Frank Schubert, who is managing the initiative campaigns, said, "It certainly is a signal to the unions that they're not going to engage in a one-handed attack, that the industry is going to fight for its interests and the interest of the patients that it serves." [8]

2004: Depression calculator

In June 2004, PhRMA teamed up with the U.S. Chamber of Commerce and the American Psychiatric Association "to demonstrate the cost of depression in the workplace and to show employers that treating affected workers would improve the bottom line." The three groups endorsed a "depression calculator," which allows employers to estimate the effect of untreated depression on their company's profits, through absenteeism and low productivity. The calculator also figures "how much the business would save if employees were treated."[9] The Arizona-based "health-care consulting firm" The HSM Group organized the calculator's public "introduction." At the press conference unveiling the calculator, PhRMA's senior vice president for policy, research and strategic planning, Richard Smith, said: "A depressed employee is less productive or absent for 30 to 50 days a year. ... The person's medical costs are $2,000 to $3,000 more than other employees."[10]

Self-regulation of drug ads

In May 2005, former member of Congress Billy Tauzin, then PhRMA's head lobbyist, told the New York Times that "drug companies [are] trying to develop a voluntary code of conduct for the advertising of prescription medicines on television and in print." Tauzin said "a good strong code" would likely be issued in June or July 2005. However, "one purpose" for the code "is to fend off more stringent federal regulation," wrote the New York Times. [11] "Better to self-regulate than to have someone else tell you how to conduct your business," one pharmaceutical marketing chief told Advertising Age.

Consumer groups blasted PhRMA's guidelines. Commercial Alert's Gary Ruskin called them "utterly lacking in principle. They are a public relations exercise that cloaks doing nothing in a stream of verbiage that sounds like doing something. They will cause no inconvenience for the drug industry and no real change of behavior. Their aim is to shield the profits of the drug companies, not the health of Americans. Nor will they stop the fleecing of taxpayers, through excess demand for prescription drugs. ... The new PhRMA policy is even soft on erectile dysfunction ads. Parents shouldn't have to shield their children from raunchy drug ads." [14]Consumers Union called the PhRMA guidelines "a placebo that will have little impact on informing consumers about the real effectiveness of drugs or their possible safety risks." [15]

In January 2006, just after the PhRMA guidelines went into effect, Advertising Age reported, "Drug makers appear to be abiding by the 15-point code of conduct with very few exceptions. One exception: None of the ads [the reporter viewed] conformed to Guideline No. 15: Companies are encouraged to include information in all DTC advertising, where feasible, about help for the uninsured and underinsured. Also, some of the 15-second spots were not able to adhere to Guideline No. 4: DTC TV and print advertising of prescription drugs should clearly indicate that the medicine is a prescription drug" (Rich Thomaselli, "Big Pharma Keeps Its New Year's Resolution," Advertising Age, January 9, 2006).

FDA funding fees

U.S. government regulating agencies don't negotiate their budgets with industries they oversee, with the exception of the Food and Drug Administration (FDA). In the early 1990s, the pharmaceutical industry began paying the FDA millions of dollars in user fees in order to speed up the drug approval process. These fees "now fund more than half the agency's critical drug-review process." Industry groups and the FDA renegotiate the fees and how they're used every five years, giving drug makers "considerable input into which programs receive funding." In 2006 the FDA negotiated an agreement with the Pharmaceutical Research and Manufacturers of America and Biotechnology Industry Organization. Industry groups pushed for even faster decisions on labeling and other "conditions" of new drugs and the FDA negotiated more funding to monitor drug safety following approval.[24]

International activities

PhRMA lobbying activities have extended outside of the United States. "America's big drug companies are intensifying their lobbying efforts to 'change the Canadian health-care system' and eliminate subsidized prescription drug prices enjoyed by Canadians," CanWest News Service reported on June 9, 2003. "A prescription drug industry spokesman in Washington confirmed to CanWest News Service that information contained in confidential industry documents is accurate and that $1 million US is being added to the already heavily funded drug lobby against the Canadian system." PhRMA was the leading drug industry trade group behind the increased lobbying and PR campaign. PhRMA was also independently spending $450,000 to target the booming Canadian Internet pharmacy industry, which has been providing Americans with prescription drugs at lower prices than in the United States.

Rich Thomaselli, "PR Seems To Be the Rx to Get Around DTC Rules: Firms Confirm Pharma Is Seeking Ways To Live with (But Not Skirt) Guidelines," Advertising Age, September 26, 2005, p. 6 (not available online).